UBA’s profit shoots up by 33% in 9 months
Growth driven by strong performance of its recurring revenue lines
Temitope Joseph | Wednesday, 18 October 2017 3:22pm | business
The United Bank for Africa, UBA Plc. has recorded a gross earning of N333.905 billion and a profit before income tax of N78.325 billion, representing a 26% & 33% increase respectively, above N265.527 billion and N58.8 billion recorded for 2016.
Contained in a report titled "Condensed Consolidated Financial Statement for the nine month ended on 30th September” the bank attributed the earnings to the strong performance of its recurring revenues lines, enhanced customer engagement and focus on continuous improvement in service quality.
Obtained by thebusinesspost.ng on Wednesday, the report revealed that the bank closed the third quarter with total assets of N3.770 trillion, a 7.6% increase from 3,504 trillion in 2016, net loans at N1.60 trillion, reflecting a prudent 6.0% YTD growth in the loan book, Customer Deposits at N2.52 trillion, a modest 1.4% YTD growth compared to N2.49 trillion as at 2016 and shareholders’ funds at N507.6 billion, up 13.3% YTD, reflecting strong internal capital generation.
Accordingly, the bank grew its net interest income to N152.3 billion, up from N112.3 billion, its net impairment loss in loan and receivables rose to N12.9 billion from N9.1billion recorded in 2016, while its profit after tax stood at N60.9 billion, an impressive 23.0% YoY growth compared to N49.5 billion in 2016 Q3.
Commenting on the bank’s earnings report, Kennedy Uzoma, the bank's Group Managing Director/CEO, said “These extremely positive third quarter results are an attestation of our ability to sustainably grow earnings and market share, notwithstanding the challenging operating environment.
“We grew nine-month top-line by 26%, to an unprecedented N334 billion, driven particularly by the strong performance of our recurring core revenue lines. Whilst maintaining a prudent risk profile, we achieved better pricing on the loan and treasury portfolios, protecting our net interest margin at 7.3%, even as tight market liquidity increased funding cost by 10bps to3.8%”.
He added: “These positive developments reinforce our constructive outlook on earnings and balance sheet growth for the last quarter of the year. We prudently grew our loan book by 6% in the first three quarters of the year, broadly on track to deliver our 10% target for 2017, as we focus on quality counterparties.
“The Group’s NPL ratio remains modest at 4.2% with 119% provision coverage (inclusive of prudential provision) and cost of risk eased 10bps to 1.1%. Our success in low cost deposit mobilization is yielding the desired results, as we grew retail deposits by 14% in the period, supporting our 8% year-to-date balance sheet growth”.
Also speaking on the bank’s financial performance and position, the Group CFO, Ugo Nwaghodoh, explained that although high domestic inflation, notably in Nigeria and Ghana, raised external cost pressures, alongside the lag impact of Naira devaluation, the bank will remain on cost efficiency initiatives, adding that cost-to-income ratio moderated 140bps year-on-year to 61.5%.
“We recorded strong growth across our diversified business segments and geographies. Our Africa operations (ex-Nigeria) again grew strongly in the period, contributing a third of top-line and approximately 40% of earnings. As we consistently gain market share in digital banking, remittance and trade flows, we are sustainably growing the non-funded income line, which currently represents 28% of our earnings” he stated.